The Downside of Downside Risk Management: Valuation Matters

A long-term investor can sometimes be harmed by over-diversification and costs from strategies that don't address the real risk of losing purchasing power or help achieve long-term financial goals.


Daniel Needham, CFA, Chief Investment Officer, Morningstar Investment Management LLC, explores risk management approaches, including:

  • How Modern Portfolio Theory may leave long-term investors exposed to various types of true risk

  • Why “silver bullet” strategies aiming to solve the volatility “problem” can be like snake oil to long-term investors

  • How a valuation-driven investment approach could potentially help improve return prospects and help to mitigate risks that matter to investors